On February 13, 1914 composer Victor Herbert was eating dinner at the Hotel Claridge in NY City when he heard the piano player in the restaurant playing one of his compositions. As he looked around the bustling restaurant, he realized that while the patrons were eating and spending money, they were enjoying the music he wrote. The Hotel was making money, the piano player was getting paid, but he was getting nothing even though it was his music that was entertaining the people around him.

He decided to get together with a few of his composer friends from “Tin Pan Alley” like Irving Berlin, Otto Harbach, James Weldon Johnson, Jerome Kern and John Phillip Sousa and they created the non for profit organization called ASCAP (American Society of Composers, Authors and Publishers) to protect their rights as music composers. They began to collect fees from the music houses, bars and restaurants in the NY area and distributing those funds to the members that were writers or publishers of the music that was being performed.

BMI

When Radio started to play recorded music ASCAP started collecting licencing payments from these broadcasters to compensate their members who were the writers and publishers of the music. Between 1931 and 1939 ASCAP raised the licencing rates 400% and in 1940 they tried to double their rates which proved to be the straw that broke the camels back. The broadcasters boycotted (CBS and NBC) any music that was licensed by ASCAP and refused to play them on their stations. Instead they played only regional music, Country and Blues which was, at the time, looked down upon by ASCAP. At the same time the Broadcasters felt they needed an alternative to ASCAP, They got together and created their own organization called “BMI” (Broadcast Music Inc) and they signed up all the artists that they were playing during the boycott. By 1941 ASCAP relented and agreed to significantly lower rates.

NOTE: “BMI became the first performing rights organization in the United States to represent songwriters of blues, jazz, rhythm and blues, gospel (black genres, performers, and writers that ASCAP did not want to represent), country, folk, Latin, and—ultimately—rock and roll. BMI proposed to compensate songwriters and publishers on the basis of a fixed fee per performance, as opposed to ASCAP’s two-tier system which discriminated against less-established songwriters.”

SESAC

Paul Heinecke

SESAC was founded in New York in 1930 by German immigrant Paul Heinecke in an effort to help European publishers with their American performance royalties. With an established cornerstone repertory of the finest European Classical Music, SESAC began to turn its attention to American music in the late 1930s. SESAC was known for supplying radio stations with their substantial Gospel catalog.

Now before we get into the subject at hand, I wanted to impress upon you the importance of organizations such as ASCAP, BMI and SESAC and I wanted to give you a brief history how they began. The Subject of performing rights would fill volumes to explain the complicated workings and to cover all the aspects of how Performing Rights Organizations work and how it would relate to you as an artist. I strongly encourage you to read up on the subject and learn about these organizations and what they do. ASCAP, BMI and SESAC protect the rights of the songwriters and publishers , and do provide a valuable service to the those who create and write music. I want to make this very clear from the onset. I also need to note that I am a writer member of ASCAP and have been for the over 30 years and I have a publishing company under them as well. This is not to say I agree with all the practices of how ASCAP distributes and operates. In fact I do have some fundamental problems with how monies are distributed and their aggressive approach to live music venues.

ASCAP has always been very aggressive in perusing venues for licensing fees. Under the premise that they are collecting for their writer members they often file large lawsuits against small venues and businesses to force them to pay up.This recently happened on Long Island NY CLICK HERE. Sometimes these tactics scare venue owners away from presenting Live music altogether. ASCAP’s aggressive attitude towards collecting licencing fees was illustrated by a recently filed suit against the Girl Scouts. ASCAP claimed that because they sang “Campfire” songs that were written by ASCAP writers they were entitled to collect licencing fees from them. Fortunately for the Girl Scouts they dropped their action against them because of intense negative publicity.

But, if done fairly, this should not really be an issue! Having an organization collect and distribute monies for the writers of the music that is being performed is not a bad thing. ASCAP has a formula to determine how much a venue’s fee would be. This formula takes into account the amount of seats are in a venue, among other factors. But, one thing that needs to be taken into consideration that is often overlooked by ASCAP. Most venues that present Live music don’t sell every seat and many times they lose money. These venues are the breeding ground for the artists of the future. Without the local music venues, musicians would not have a place to learn their craft. This is not only about the numbers, sometimes you have to look at the small venue as an investment in the future of the music business. Unfortunately, the way ASCAP goes about it just seems counter what their mission should be.

Who Get’s Paid

The way ASCAP determines how the money they collect is distributed is based on a complicated formula of royalty distribution. Part of their formular is a “Follow the Dollar” factor which, in simple language, means Radio money goes for radio airplay, TV Money goes to TV performances.

Another big part of the formula, is establishing a “weight” to a song. This is done by having a survey process that establishes that “weight”. Of course they are other factors involved, but for our purpose lets just concentrate on these two.

Unfortunately for writers of the smaller genres such as Blues, Indie Rock, Folk, etc who depend on college stations and independent public radio stations for airplay, they often get overlooked in this formula. Thought they do collect licencing fees from these stations, most of these are run as mainly “Non Profit” , their fees are lower and are in turn sampled less frequently if at all. Because of this their programming has little impact on the “Royalty Formula” and the artist being played may not get any part of the funds available even though the stations are paying ASCAP under the idea that these artists(that are registered with ASCAP) will in theory get part of these funds.

From ASCAP Website: “Where a census survey is impractical, we conduct a sample survey designed to be a statistically accurate representation of performances in a medium. All times of the day, all days of the year, every region of the country and all types and sizes of stations are represented in the ASCAP sample surveys. The greater the fee a licensee pays us, the more often that licensee is sampled. For example, a radio station that pays ASCAP $20,000 in license fees is sampled twice as often as a station that pays us $10,000.”

This process is heavily bias towards music that is played on popular commercial radio and the largest percentage of funds are collected are distributed to those artists who get airplay on the higher profile stations, the smaller niche artists are sometimes overlooked. Even if an artist is played heavily on many college stations they might not get any royalties while artists being played on larger commercial stations will get the share of royalties that are paid by these smaller stations as well as the royalties paid by the commercial stations.

Is this Fair?

Now here lies the problem with Venues. The “Follow the Dollar” policy does not apply to the monies collected from venues for the Live performance of music!

From ASCAP Website:“Fees collected from non-broadcast, non-surveyed licensees (bars, hotels, restaurants and the like) are applied to broadcast feature performances on radio and all performances on television, which serve as a proxy for distribution purposes”.

This means that if you own a blues bar, a venue that presents indie rock, Folk or any other genre of music that is not in the mainstream the money ASCAP collects from your venue goes into the general royalty fund. The chances of the writers of the music that is being presented getting any of this money is slim to none. They do not survey these venues, they don’t apply the “Follow the Dollar” policy to the monies collected from these venues. All the monies that are collected go into the general pool for TV and Radio royalties. The idea of the performing rights organizations is to collect on behalf of the artists whose music is being performed. By not surveying or establishing what artist’s music is actually being performed in these venues and not actively assuring that they are getting their fair share of the monies collected from this revenue stream, they are in fact, not representing these artists properly. Based on this fact, you can make the case that they are collecting monies from these venues under false pretense.

I know that in my experience, most venues that present Live Music, the musicians do not perform music that is a representation of what is on “mainstream radio”. The large part of this market is represented more with Tribute Bands, Classic rock Cover bands, 80’s cover bands, Blues bands, Original bands, Small Touring acts, Rock Bands, Singer Songwriters, Folk, Country, Bluegrass, etc. Let’s face it, this is the music that makes up a large majority of the Live Music market in the small local venues.

This brings up the largest problem I have with ASCAP’s aggressive attempts to collect fees from these venues. That problem is their refusal to acknowledge this simple fact. They claim it is not cost effective to survey these venues to properly pay royalties to the rightful artists, but they have no problem employing lawyers, collector representatives, lobbyists, etc to get the funds. In this day and age, there must be a way to establish a more inclusive survey method that represents the true percentages that should be paid to the artists whose music is being performed in venues as well as radio and TV.

If you think about it, had they succeeded in collecting money from the Girl Scouts, based on their own formula of royalty distribution and the information on their website, they essentially admit that the writers of the music they used as justification to collect the money, would never have seen a dime of it.

Again, I do stress that Performing Rights Organizations are important to all musicians who write music. But, the way ASCAP addresses the monies collected from local live music venues is unfair to the artists whose music is being performed in these venues and dishonest to the venues they collect from. It might be time for the members who are being shortchanged by ASCAP’s current “Formula of Royalty Distribution” to petition them to establish a fair way to address this problem, or stop using their name and music as justification to collect money from these small local live music venues.

A Solution

I suggest that all the PRO’s should accept that a venue that has a capacity of less than 150 should be designated as an incubator venue and should be either exempt or qualify for a significantly lower rate. These venues will help promote and support LIVE music within their communities. It should be in the best interest of the PRO’s that they support and help create a live music scene.

It is also imperative that the PRO’s move into the 21st century and institute processes and procedures that will insure the artists who deserve to be paid for the performance of their music is actually paid. The argument that it is not cost effective is not viable.

Playing your own original music in a venue that pays the PRO’s and are you registered as an ASCAP or BMI artist? You can report your playlist to ASCAP and BMI for payment.

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